It's Time for Investors to Lean-In on Wasted Food
This blog was co-authored by JoAnne Berkenkamp at NRDC and Allan Pearce at Trillium Asset Management.
Food-based businesses such as restaurants, grocery stores, and institutional foodservice providers are a critical link between the farm and our forks. However, these types of businesses also generate a great deal of food waste, estimated at four out of every ten pounds of food wasted. All that wasted food is valued at roughly $57 billion per year. Food companies pay to purchase, transport, handle, prepare, market, and dispose of food that goes unsold and the impact on their bottom line can be significant. Conversely, a recent study of corporate food waste reduction initiatives found that every dollar invested in those efforts yielded a net financial return averaging $14. Food businesses—and their shareholders—benefit when they cut waste.
The sheer magnitude of wasted food has driven this issue into the national spotlight, bringing heightened scrutiny to food-based businesses. In turn, investors that hold stock in these companies, such as pension funds, endowments, and asset management firms, have a direct interest in understanding how the generation, management, and disposal of wasted food effects the profitability and environmental performance of companies in their investment portfolios.
What’s more, large investors have a uniquely powerful role to play in calling for better corporate performance when it comes to wasted food. As major shareholders, these firms can gain the attention of company leadership. Through their investment screens and the use of strategies like shareholder resolutions they are well-positioned to catalyze change in the corporate sector.
In particular, we believe that Sustainable and Responsible Investors (SRI) should explicitly integrate corporate performance on food waste into their research processes, asking the tough questions and factoring them into decisions about what stocks to buy or sell. They should also call upon companies to demonstrate how they are managing the financial costs of wasted food and the supply chain, regulatory and reputational risks associated with it. In addition, investors should take a hard look at how food waste practices either enhance or exacerbate companies’ greenhouse gas and water footprints.
The time has come for investment firms to become more active players in the national dialogue on food that goes to waste. We in the food waste arena also need investors as allies in raising these concerns with major companies and moving them toward greater action and transparency. With that in mind, NRDC and Trillium Asset Management have developed a new briefing paper to provide investors with key insights on:
- The consequences of wasting food;
- The risks businesses face when wasting food including hits to the bottom line, supply chain risks, regulatory risks, and adverse effects on corporate reputation;
- Guidance for prioritizing corporate action on preventing food from going to waste, donating surplus foods and recycling remaining food scraps; and
- Best-in-class examples of corporate leadership.
By incorporating these considerations into their decision-making and dialogue with food-based businesses, investors can play a pivotal role in catalyzing corporate innovation and accountability. We welcome their engagement.